Sequester cuts hamper outreach on export reform

Monday, April 29, 2013

Massive changes to the U.S. export control regime are beginning to be made by the Obama administration, but the automatic budget cuts that kicked in March 1 are limiting the Bureau of Industry and Security's ability to educate shippers about the new rules and how to follow them, Eric Hirschhorn, undersecretary for industry and security at the Department of Commerce, said.
Speaking last week during a webinar produced by American Shipper, the head of BIS said the agency has seen its budget sliced by about $7 million to just under $94 million for the remainder of the fiscal year due to the sequester process approved by Congress.
BIS is trying to help exporters get up to speed with new and pending rules designed to simplify licensing requirements and focus enforcement on products, end users and destinations of greatest concern, but officials cannot travel around the country to explain the changes because the agency had to severely cut its travel budget to meet the reduced funding level, Hirschhorn said.
Instead, BIS will concentrate on conducting seminars in the Washington, D.C. area and participating in webinars and teleconferences to educate and train business about the export rules.
"We are disappointed at the inability to meet face to face with exporters as much as we'd like, especially the smaller and mid-size companies that we think will benefit the most from this reform," he said.
The Obama administration has been working since 2009 to modernize and streamline export licensing requirements for military and commercial products that also have military applications. The existing rules are widely viewed by industry and experts as too restrictive, trapping normal items in the same categories of restricted goods as more sensitive high-tech and military products. That has caused many foreign companies to design products without U.S.-made components to avoid the more restrictive re-export requirements of the United States.
A central element of the reform effort involves moving tens of thousands of items from the U.S. Munitions List overseen by the State Department and subject to International Traffic in Arms Regulations to the Commerce Department's more flexible Commerce Control List, which is intended to make it easier for companies to engage in trade while protecting against the transfer of the most sensitive goods.
Last month, the government published the final regulations for moving aircraft and certain military aircraft engine parts to the Commerce Control List, the first two of 19 categories that will be transferred. The government is also trying to provide clearer guidance about licensing or export restrictions when a product that has no military use contains a small component that was originally designed for a defense purpose.
A defense authorization bill in January restored the president's authority to determine appropriate export controls over satellites and related items.
Hirschhorn said in the coming weeks and months the Commerce Department intends to publish a proposed rule on satellites, plus formal rules for the transfer from the Munitions List of categories for surface vessels, vehicles, materials and miscellaneous, and submarines and submersibles.
And, he said, a proposed rule for revising Category XI on electronics has been significantly changed in response to public comments and will be republished again for public comment. Hirschhorn said he thinks exporters will be pleased with the revised text.
The complete webinar can be listened to in its entirety on American Shipper's Website under webinars. - Eric Kulisch